South Africa prioritizes infrastructure and power expansion
Speaking at the State of the Nation Address on 11 February 2021, South Africa’s President Cyril Ramaphosa provided a progress report on the country’s Economic Reconstruction and Recovery Plan.
With priority interventions including a massive rollout in infrastructure and the rapid expansion of power generation capacity, South Africa is aiming to dramatically increase industrialization, production and job creation in a bid to ensure not just economic stability, but growth.
During his speech, H.E. Ramaphosa provided insight into key infrastructural developments, including the development of an infrastructure investment project pipeline, the expansion of South Africa’s road network, the building of new settlements, and the utilization of the Infrastructure Fund.
“We have now developed an infrastructure investment project pipeline worth R340 billion [$23.2 billion] in network industries such as energy, water, transport and telecommunication,” stated the President. “Construction has started, and progress is being made on a number of these projects.”
“[Additionally], since the announcement of Economic Reconstruction and Recovery Plan, we have launched two major human settlements projects that will provide homes to almost 68,000 households in the Gauteng Province. Similar settlements are planned in other provinces. The Infrastructure Investment plan identifies roads projects worth R19 billion [$1.3 billion] covering the spine of the South African road network. These infrastructure projects will lead to the revival of the construction industry and the creation of much-needed jobs”
In a bid to rapidly expand energy generation capacity and ensure a secure energy supply for the country, South Africa is prioritizing energy developments within the Economic Recovery Plan. Through the restoration of the state-owned utility, Eskom, to full operational and financial health, and accelerating its restructuring process, the President believes the country can achieve this objective.
“Eskom has been restructured into three separate entities for generation, transmission and distribution,” stated the President. “This will lay the foundations for an efficient, modern and competitive energy system. In December 2020, government and its partners signed the historic Eskom Social Compact, which outlines the necessary actions we must take, collectively and as individual constituencies, to meet the country’s energy needs now and into the future.”
Additionally, the President provided insight into the country’s plans regarding increases in generation capacity considering the predicted electricity supply shortfall as a result of old coal-fired power stations reaching their end of life. Through the opening of the Bid Window 5 in the coming weeks, and Bid Window 6 expected in August 2021, the country aims to significantly expand capacity.
“As part of the measures to address this shortfall, we will in the coming weeks issue a request for proposals for 2,600 MW from wind and solar energy as part of Bid Window 5,” the President announced. “This will be followed by another Bid Window in August 2021.”
Schedule 2 of the Electricity Regulation Act, 2006 (Act 4 of 2006) will be amended within the next three months. Accordingly, this amendment seeks to increase the licensing threshold for embedded generation in which consultation with key stakeholders and the finalization of the necessary enabling frameworks is set to unlock up to 5,000 MW of additional capacity.
“We will not achieve higher rates of growth and employment if we do not implement structural economic reforms,” stated the President. “These reforms are necessary to reduce costs and barriers to entry, increase competition, stimulate new investment and create spaces for new entrants in the market.”